The Japan Times - US stocks rise as fears over banks, trade war ease

Sentiment had soured Thursday after two regional US banks disclosed issues with loans, sparking a sell-off in banking stocks.

"As well as ongoing trade war uncertainty between the US and China, sluggish global growth and stretched valuations, credit risk in US regional banks has added to the list of growing worries," said Fawad Razaqzada, market analyst at City Index and Forex.com.

But Wall Street's main indices were in the green in morning trading as shares in regional banks rose following the sell-off.

Investors have been nervously watching the US banking sector since parts company First Brands and subprime lender Tricolor filed for bankruptcy in September, with the former owing billions to lenders.

Those fears deepened this week after Zions Bancorp disclosed a $50-million charge tied to commercial loans from its California arm, while Western Alliance said a borrower failed to deliver the promised collateral.

Zion Bancorp shares were up 5.5 percent on Friday after having plunged 13.1 percent the previous day, while those of other regional banks also recovered some of their losses.

"It's also worth considering that the banking sell-off may be overdone," said David Morrison, analyst at investment platform Trade Nation.

"It's possible that these are all isolated incidents which are completely unconnected," Morrison said.

"Then again, a few analysts have been warning about a lack of transparency across private credit and private equity for a while now. So, there’s certainly a risk of more bad news to come."

In Europe, London and Frankfurt were in the red in afternoon deals but Paris rose after French Prime Minister Sebastien Lecornu survived two no-confidence votes the previous day.

Deutsche Bank shares slumped 4.6 percent, while French bank Societe Generale shed 3.9 percent and Britain's Barclays dropped around four percent.

Hong Kong and Shanghai dropped more than two percent, and Tokyo also closed lower.

The bank worries sent safe-haven gold to another record, of $4,379.93 an ounce, and led investors to pile into government bonds.

Investors also remained on edge as Washington and Beijing exchanged salvos this week on trade and shipping, after Trump warned he would hit China with 100-percent tariffs over its rare-earth export controls.

Analysts, however, said Trump eased some concern by saying in a Fox Business interview that the higher tariffs were "not sustainable".

Adding to unease, lawmakers in Washington are still no closer to ending a government shutdown that has delayed the release of key economic data used by the Federal Reserve to decide on policy.

Still, expectations the Fed will cut interest rates at least once more this year has given traders some support.

- Key figures at around 1355 GMT -

New York - Dow: UP 0.4 percent at 46,149.99 points

New York - S&P 500: UP 0.2 percent at 6,640.78

New York - Nasdaq Composite: UP 0.1 percent at 22,584.51

London - FTSE 100: DOWN 0.6 percent at 9,379.13

Paris - CAC 40: UP 0.3 percent at 8,209.62

Frankfurt - DAX: DOWN 1.3 percent at 23,949.55

Tokyo - Nikkei 225: DOWN 1.4 percent at 47,582.15 (close)

Hong Kong - Hang Seng Index: DOWN 2.5 percent at 25,247.10 (close)

Shanghai - Composite: DOWN 2.0 percent at 3,839.76 (close)

New York - Dow: DOWN 0.7 percent at 45,952.24 (close)

Euro/dollar: DOWN $1.1664 from $1.1692 on Thursday

Pound/dollar: DOWN at $1.3398 from $1.3436

Dollar/yen: UP at 150.49 yen from 150.35 yen

Euro/pound: DOWN at 87.01 percent from 87.02 pence

West Texas Intermediate: UP 0.2 percent at $57.10 per barrel

Brent North Sea Crude: UP 0.2 percent at $60.16 per barrel

M.Yamazaki--JT